Summary: Qatar recently passed a new UNCITRAL Model Law-based arbitration law, following a trend set by Saudi Arabia and Bahrain. We look at some key provisions of the new law and what it means for the wider Gulf region.
On 12 April 2017, Qatar’s new arbitration law (the “New Law”) took effect. The New Law significantly changes the framework for arbitration in Qatar, repealing the articles of the Qatar Civil Procedure Code which dealt with arbitration, and replacing them with a standalone arbitration law. Whereas the previous law was somewhat limited in scope and did not reflect common international practice, the New Law is based on the UNCITRAL Model Law, a set of principles of best practice in international arbitration.
The passing of the New Law reflects a growing recognition of the fact that, for many international companies, an effective regime governing arbitration and the enforcement of arbitral awards can be a significant consideration in deciding whether to do business in a country. Although some provisions of the New Law may raise a few eyebrows, overall it represents a step in the right direction, both for Qatar and the wider Gulf region in terms of openness to arbitration.
The New Law applies automatically to arbitrations seated in Qatar, and to international commercial arbitrations seated outside Qatar, where the parties agree that their arbitration will be subject to the New Law. However, the New Law does not apply to disputes concerning administrative contracts (unless the arbitration agreement is approved by the Prime Minister of Qatar) and disputes between public bodies (which cannot be subject to arbitration). The New Law applies to both ongoing and new arbitral proceedings.
Many elements of the New Law will be familiar to arbitration practitioners, including:
- the competence-competence principle: the arbitral tribunal has the competence to determine any queries as to its jurisdiction to entertain the dispute;
- interim measures and preliminary orders: the arbitral tribunal is empowered to grant interim measures and preliminary orders, including for the preservation of assets and evidence and the prevention of prejudicial actions. If the tribunal is not authorised or able to act, then the Qatari courts can grant such measures;
- limits on procedural objections: if one party considers that another party has failed to comply with a provision of the New Law, that party must raise that objection promptly. Likewise, any claim that the tribunal has exceeded the scope of its authority must be raised as soon as the issue arises. This should help to deal with the issue of parties raising procedural objections as a tactic to resist enforcement, after the substantive arbitral proceedings have finished; and
- limited grounds of appeal: arbitral awards may only be appealed for one of four reasons:
- invalidity of the arbitration agreement;
- the applicant was not given proper notice of the proceedings, or was unable to present its case;
- the award deals with matters outside of the arbitration agreement, in which case those parts of the award falling outside the arbitration agreement will be nullified, if possible; and
- the proceedings were not in accordance with the New Law.
However, other elements of the law may seem less familiar, including:
- selection of arbitrators: the parties do not have a free choice in the selection of arbitrators. Instead, the New Law requires that arbitrators must be appointed from a list of accredited arbitrators held by the Qatar Ministry of Justice. However, the New Law also goes on to say that any person may be appointed as an arbitrator provided he or she is of full legal capacity, good reputation and has not been convicted of an offence involving dishonesty or immorality. It is not clear whether an arbitrator must meet the above criteria and be a listed accredited arbitrator, or whether only one of these will suffice; and
- registration of the arbitral award: the tribunal must send a copy of the award to the Ministry of Justice within two weeks of issue. The New Law does not specify the consequences of failure to do so, particularly if a party seeks to enforce the award in another jurisdiction. Likewise, the New Law does not state whether the Ministry of Justice will be required to keep the award confidential.
Despite these provisions, in the main the New Law marks a more arbitration-friendly approach for Qatar, and compares favourably to some other comparable jurisdictions. For example, the New Law offers general immunity from liability for arbitrators, except in cases of bad faith, collusion or gross negligence. By comparison, the UAE has recently introduced the threat of temporary imprisonment for arbitrators who fail to maintain the requirements of integrity and impartiality, which is expected to have a significant impact on the number and quality of arbitrators willing to be appointed to UAE-seated arbitrations.
More widely, the New Law forms part of a wider trend in the Gulf in favour of arbitration. This constitutes a marked change of attitude in a region that has historically perceived international arbitration with some suspicion. Arguably, there are good reasons for this attitude; there were a number of arbitral awards which were unfavourable to various Gulf states or state-owned companies during the 1950s and 1960s. This culminated in the Ruler of Abu Dhabi case, in which the arbitrator, Lord Asquith, notoriously decided to apply English law instead of the law of the contract, whilst simultaneously making derogatory comments about the sophistication of local law.
For now, that suspicion seems to be dissipating. Aside from Qatar, both Saudi Arabia and Bahrain have recently passed dedicated arbitration laws based on the UNCITRAL Model Law (in 2012 and 2015, respectively). It remains to be seen whether Kuwait and the UAE, which currently lack standalone arbitration laws, will follow suit.